Investors upset over falling Pakistani share prices yesterday smashed the Karachi Stock Exchange's windows during protests that led to scuffles between market traders and share owners demanding the temporary closure of the stock market.

The KSE-100 index dropped by 2.7 per cent to close at 10,212.92. The index has plunged 35 per cent from a record high on April 21.

"I am upset because I am constantly losing money and there is no one ready to help me," said Naeem Jehandad, an equity investor in Islamabad, who said the value of his shares had halved in the past four months.

"For me, this is just a murder for my economic future," added Usman Khan, a lift operator who returned from the Middle East last year and invested his savings of Rs350,000 ($5,000, £2,500, €3,150) in the KSE.

"There is so much uncertainty all around that it has crept in to the stock market," said Shuja Rizvi, head of brokerage services at Karachi's Capital One securities brokerage house.

Last night a group of large investors and brokers set up an emergency fund to buy shares from small investors, many of whom were at the centre of yesterday's violence. The Rs3bn fund was mainly aimed at preventing a recurrence of the unrest, analysts said.

Razi-ur-Rehman, who chairs the securities and exchange commission, Pakistan's stock market regulator, said: "If we can get rid of distressed investors, that would help to stabilise the situation. The intention is to have an orderly fall rather than an abrupt fall."

The slump in investor confidence was accelerated by the weakening rupee, which dropped by 1.3 per cent yesterday on political uncertainty and an economic meltdown during Pakistan's transition to civilian-led democracy.

Pakistan's current account and fiscal deficits are unsustainable, inflation is at a three-decade high of more than 21 per cent, and foreign currency reserves have fallen below $11bn, more than $5.5bn under last October's record high.

Analysts said worries were mounting among Pakistanis about the government's campaign to get rid of President Pervez Musharraf. He has been credited with overseeing a five-year economic recovery that made the KSE one of the fastest growing emerging markets.

"The danger is that we could see our economic -success unravelling," said Salman Shah, former de facto finance minister. He said the government should act to tackle growing discontent over the worsening economy and internal security conditions and to stem further slide in investor -confidence.

The KSE's decline has also been fuelled by reports in the past week that the US, along with its Nato allies in Afghanistan, was considering putting more troops along Afghanistan's border with Pakistan to combat Taliban fighters crossing from the Pakistani side. Additional reporting by agencies

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